Construction Payment | Claim for Construction Payment Against a Construction Company, 12 Million Won Granted

The client concluded a contract for the construction of a particular facility with the opposing party, a corporation, and carried out the work in accordance with the terms of the contract.

The construction amount was set at a total of 13 million won, and the client completed all of the work within the agreed scope.

However, after the work was completed, the opposing company refused to pay the full construction amount, citing reasons such as “there are problems with certain portions of the work” and “additional supplementation is needed.”

The client faithfully responded to site inspections and requests for supplementation, and although the construction was substantially in a condition that posed no impediment to use, the opposing company delayed payment without any clear grounds.

During this process, the client had secured sufficient materials to prove that the work had been completed but found it difficult to determine how to respond legally, and so requested the assistance of an attorney.

To provide assistance in the construction payment lawsuit, the attorney prepared the following strategy.

1. Organizing the Contract Terms and Scope of Work

The attorney first reviewed the construction contract, the estimate, and the detailed work breakdown to organize the agreed scope of work and the amount.

Through this, the attorney distinguished whether the “unperformed work” alleged by the opposing company was in fact an essential part of the work under the contract.

2. Proving the Actual Performance of the Work

To prove that the work performed by the client conformed to the terms of the contract, the attorney comprehensively organized the following items and proved that the work had been substantially completed.

• Photographs before and after construction
• On-site work records
• Records of materials used
• Status of use after completion of the work

3. Constructing a Rebuttal to the Reduction Argument

The opposing company refused to pay the full amount on the ground that some supplementation was needed, but the attorney constructed a rebuttal centered on the following points.

• That the matter in question was not a material defect
• That there was no impediment whatsoever to the main purpose of the work
• That even if a defect existed, it could not serve as a ground for nonpayment of the full amount

As a result, the attorney argued before the court that the full construction payment, or at least a substantial portion of it, had to be paid.

Construction payment refers to the money that a party who has performed construction work under a contract for work or a subcontract is to be paid in return.

In general, when the work is completed in accordance with the terms of the contract or reaches a condition in which it can be used and enjoyed, the obligation to pay the construction payment arises.

In practice, it frequently occurs that, even though the work has actually been performed, the orderer or the prime contractor delays or refuses payment of the construction payment by citing reasons such as alleged defects, delayed inspection, or incomplete internal settlement.

In such cases, the claim for construction payment leads to a legal issue in which the terms of the contract, the scope of the work, whether performance occurred, and whether a defect exists are comprehensively assessed.

A construction payment dispute typically proceeds through the following stages.

• Completion of the work or arrival at the performance stage

Performance of most or all of the scope of work agreed under the contract

• Request for payment of the construction payment

Issuance of a tax invoice, dispatch of a payment request, and the like

• Nonpayment or assertion of a reduction

Assertion of the need for defect correction or supplementation, incomplete inspection, and the like

• Preliminary response such as certified mail

Clarification of the fact of completion of the work and the payment obligation

• Filing of the construction payment lawsuit

Claim made taking into account, where necessary, the possibility of a partial reduction

• The court's determination

Determination of whether the work was performed, the degree of any defect, and the scope of any reduction

When preparing a construction payment lawsuit, it is important to organize the following materials systematically.

The more sufficiently these materials are prepared, the more clearly the fact of completion of the work and the obligation to pay the construction payment can be proved, which may also have a positive effect on the speed and outcome of the proceedings.

A construction payment dispute is not a question of “whether the work was done or not” but rather an area in which the terms of the contract, the scope of the work, whether a defect exists, and the possibility of a reduction in the payment are assessed in combination.

Where the opposing party is a corporation, there are not a few cases in which payment is delayed on the ground of internal approval or avoidance of responsibility, so a response that structurally organizes the fact of completion of the work and the legal issues from the initial stage is very important.

If you are experiencing difficulties due to nonpayment of construction costs, we recommend that you submit a 🔗legal consultation reservation and then, through a professional review, accurately assess the possibility of recovery and establish a response strategy.